There were a few gains in cash prices Friday, primarily in the growing-hotter Northeast, but they were strongly outweighed by softness in the rest of the market. The West was uniformly lower by double-digit amounts as excess supplies, OFOs and a general cooling trend weighed on regional pricing.
Flat to up a little more than a dime quotes occurred mostly in at Northeast citygates and in the Gulf Coast. Otherwise, losses ranged from a couple of cents to more than 30 cents.
Widespread rainstorms were due to lower temperatures and accompanying air conditioning load in the South over the weekend, while a cold front would be keeping a lid on thermometer levels in the Upper Midwest, and the Pacific Northwest would be five to 15 degrees below average, The Weather Channel (TWC) said.
At the other end of weekend weather trends, many places in the Northeast were predicted to experience their hottest day Saturday since the summer of 2002, according to TWC. “Places in southern New England could approach 100 degrees, and that’s not the heat index,” it added.
El Paso ended a low-linepack Strained Operating Condition notice Friday, but California’s two big transmission systems replaced that with high-linepack OFOs issued for Saturday (see Transportation Notes). Other negative pressure on western prices came from high-linepack conditions on Westcoast and Kern River, although Westcoast did ease its imbalance tolerance range from zero pack/20% draft to 5% pack/15% draft for Saturday’s gas day.
Although the return of hot weather in the South and Upper Midwest early this week may rally eastern prices Monday, it will be without futures support. The natural gas screen fell more than a dime Friday, even as crude oil futures continued to flirt with the $60/bbl level, rising 42 cents to settle at $59.84. A price rebound is considerably more iffy in the West, where below normal temperatures are expected in much of the region this week and the issue of a surplus of supply seems unlikely to go away.
A Calgary-based producer said there really shouldn’t be much impact from the outages of a half-dozen Empress extraction plants. Heating values of TransCanada deliveries will be higher for a while, of course, but that’s unlikely to harm LDC systems, he said. Alberta production gets some processing in the field before going into NOVA, and TransCanada will blend the bypassed volumes at Empress with other gas that has been processed, the producer said.
A TransCanada spokesman confirmed that there were no concerns about delivery of too-rich gas and that customers had been alerted to a posted increase in heating values that would stay in effect through the end of June.
The impact of the Empress outages is expensive for NOVA Chemicals Corp. The Pittsburgh-based company, which has extensive operations in Alberta, said Friday the total earnings impact of the outage is expected to be in the $25-50 million range pre-tax ($15-30 million after-tax), although the loss likely will be covered by insurance. Because of the reduced ethane availability at Empress, the company has slowed down production at its Joffre, AB manufacturing site to about 40% of capacity.
The Calgary producer said he comes into work around 6:30 a.m. local time each day, “but maybe it would be better to start later” since western prices have tended to move a little higher in late trading recently. That wasn’t the case Friday as prices fell off late in the morning, he added, but at least basis spreads among western points stayed stable.
“Malin didn’t really flow all that well, but that’s been happening all month,” the producer said. He explained that intra-Alberta supplies were seeing considerably greater more eastbound demand because of higher pricing in that direction, so it was more difficult to make a profit on flowing Alberta gas south to Malin.
The producer said he made one Westcoast Station 2 bidweek sale in the low C$7.00s Friday, but did not trade Sumas or Malin for July, citing the above demand for eastbound gas out of Alberta as inhibiting transport coverage southward. He noted that next Friday is Canada Day, “our nation’s birthday,” so Thursday’s trading north of the border will be for gas flows through Tuesday. Canadian traders will work on July Fourth even though Nymex will be closed, he said.
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